Posts Tagged ‘upwards’
CHART OF THE DAY: Your Dreams Of A Housing Rebound Just Got Smashed
Maybe Robert Shiller — who just told us that there’s no housing rebound on the horizon — is right.
His own housing index, the Case-Shiller Home Price Index, came out this morning, and it will dash the hopes of people who think we’re on the cusp of a rebound.
After a little blip upwards, prices resumed their downward slide in November.
Depressing.
Please follow Money Game on Twitter and Facebook.
Join the conversation about this story »
See Also:
- CHART OF THE DAY: Why Is The Baltic Dry Index Getting Crushed?
- CHART OF THE DAY: A Completely Random Correlation That Tells You Everything About This Market
- CHART OF THE DAY: ‘Core Economic Growth Slowed Sharply In Q4′
At This Rate, The Job Market Won’t Pick Up Until At Least 2023
Disgruntled American workers have yet another reason for pessimism: At the current rate of job creation, the U.S. unemployment rate will not fall back to “normal” levels – below 6% – until 2023.
Through most of this year the U.S. economy has managed to create about 119,000 jobs per month, but that’s barely enough to keep pace with population growth. Only job creation levels of well over 120,000 jobs per month will drive down the 9.1% unemployment rate.
For example, to get the unemployment rate below 6% by the end of 2014, job creation would need to be about 244,000 per month – more than double current levels.
“The sluggish recovery in employment is continuing, with private payroll growth still not even fast enough to keep unemployment from rising further in the medium-term, never mind bringing it down,” Ian Shepherdson, chief U.S. economist at High Frequency Economics, told AFP.
That’s grim news for millions of Americans.
Although a revived U.S. economy would go a long way to beefing up job growth levels, few see an imminent turnaround, including the typically optimistic chairman of the U.S. Federal Reserve, Ben Bernanke.
On Wednesday Bernanke revised the Fed’s projections for the unemployment rate upwards, with estimates for 2012 now up from 8% to 8.6% and estimates for late 2014 at between 6.8% and 7.7%.
“Evidently … the drags on the recovery were stronger than we thought,” Bernanke said at a news conference.
Blame Bernanke
Of course, Bernanke himself is partly responsible for the poor rate of job creation, according to Money Morning Global Investing Strategist Martin Hutchinson.
“It’s Bernanke’s fault,” Hutchinson said. “The very low interest rates are causing companies to substitute capital for labor. You can see the effect in today’s very good third-quarter productivity number — employers are using less labor per unit of output and more capital, which they can get cheaply. The effect is that job creation is very slow. That’s the very opposite of 1983 when interest rates were very high and job creation averaged about 400,000 a month.”
The high unemployment rate has become a major problem for U.S. President Barack Obama, whose attempts to address the issue have had little impact.
Hutchinson said there isn’t much that the president or Congress can do to create jobs, although that cutting federal spending would help “because it would free bank funds for lending to small business.”
It’s the Fed that could have the greatest impact.
“Interest rates are easier to change and more critical,” Hutchinson said. “The way we get back to rapid job creation is by raising interest rates to above inflation, let’s say 5%. There would be some initial turmoil, but within a year job creation rates would soar.”
Of course, it’s extremely unlikely that the Fed chairman will opt to raise interest rates anytime soon. In August Bernanke promised to keep rates at their current low levels of 0% to 0.25% “at least through mid-2013.”
The Federal Open Market Committee (FOMC), which sets Fed policy, decided on no new action at its meeting this week, while Bernanke blamed Congress for its inaction on job creation.
“We are trying to do our best to support economic growth and job creation,” Bernanke said. “It would be helpful if we could get assistance from some other parts of the government to work with us to help create more jobs.”
With the Fed making the problem worse, and Congress and President Obama unable to make a significant difference, job creation will continue to tread water – terrible news for American workers that have become increasingly dissatisfied.
Workers Worried
Americans have grown increasingly unhappy about many aspects of their jobs, but with job creation low and unemployment high, many are reluctant to leave their current job because of the scarcity of opportunity.
A Gallup Inc. poll taken in August showed that U.S. workers are more dissatisfied with their jobs now than they were in 2008. Nearly one-third, 30%, were unhappy with their salaries as well as their health insurance benefits. More than a quarter, 26%, were dissatisfied with their chances for promotion.
A more recent Gallup poll taken just last month indicated 71% of American workers are “not engaged” or “actively disengaged” from their jobs.
Still, few employees want to chance giving up what they have, no matter how much they dislike it.
An employee’s willingness to quit “is probably the best single indicator of how confident workers are,” Lawrence Katz, a Harvard University labor economics professor, told Bloomberg News.
As long as job creation in the United States remains anemic – which thanks to government policies now looks like the better part of the next decade – unemployment will continue to plague the American worker.
“Employers are not going to step up hiring unless demand picks up. But consumers are not going to spend more until employment strengthens,” Kathy Bostjancic, director of macroeconomic analysis for The Conference Board, told CNBC. She added that no help is on the way from monetary or fiscal policy, at the federal, state, or local level. “This all adds up to a labor market that will continue to struggle to deliver even modest gains this autumn or winter.”
This post originally appeared at Money Morning.
Please follow Money Game on Twitter and Facebook.
Join the conversation about this story »
See Also:
- U.S. Job Creation Up In October, Reversing Recent Declines
- 2012 Will Be A Year Of Rising Unemployment And Growing Social Unrest
- Here’s Why Businesses Are Spending But Not Hiring
US economic growth revised upwards for Q2
The Commerce Department has revealed the world’s largest economy grew by 1.3% on an annual basis in the April to June period – higher than an initial estimate of 1%.
The figure was also slightly higher than analysts’ expectations of 1.2% and follows a 0.4% growth rate in the first quarter of the year.
The upward revision was attributed to higher exports and strong spending and is the final figure for the second quarter.
For the first six months of the year, the economy expanded by 0.9% – this represented the lowest rate of growth in over two years.
Third quarter growth figures will be available next month and analysts are predicting an annualised growth rate of around 2%.
The US economy is struggling on the back of high unemployment and a depressed housing market.
Earlier this week, Federal Reserve Chairman, Ben Bernanke, warned that the US economy is facing a national crisis due to its high unemployment rate, which currently stands at 9.1%.
Earlier this month, the US Labor Department revealed the economy added no new jobs last month, which was a surprise after markets had expected 70,000 new jobs.
This represented the first time since 1945 that there has been a zero payrolls figure after 17,000 jobs were added in the private sector last month but these were cancelled out by 17,000 jobs lost in the public sector.
Mr Bernanke is urging the Government to assist the long-term unemployment and suggested that Congress should take more action to address the issue.
Earlier this month, President Barack Obama addressed the nation about a plan for job creation. He unveiled a $450 billion (£282 billion) package aimed at boosting the economy and reducing the federal deficit.
The bill includes tax cuts to workers and small businesses to boost job creation.
Mr Obama has previously said job creation is a top priority; continued high unemployment could threaten his prospects for re-election next year.
In the meantime, Mr Bernanke urged policymakers to introduce “housing policies” to boost the property market, which is currently struggling and many have suggested it is holding back the recovery.
Demand for housing in the US remains weak, despite mortgage rates hovering at record lows and falling house prices – the latter due to millions of home repossessions.
Scottish Q4 growth figures revised upwards
Scotland’s economy shrank less than thought in the October to December period, official figures revealed today. GDP was revised upwards to a contraction of 0.4% rather than an earlier estimate of 0.5%. The contraction was attributed to the bad weather during the quarter which impacted on many businesses. On an annual basis, meanwhile, the economy [...]
US Q4 economic growth figures revised upwards
The Commerce Department has today revealed the US economy grew by an annualised 3.1% in the October to December period – higher than the previous estimate of 2.8%. It was also slightly better than analysts forecast of a 3% growth rate. The upward revision in GDP was attributed to higher consumer spending – which grew [...]